Westpac strikes blow for flood residents

WESTPAC Bank has ordered its staff to only sell home and contents insurance to people living in high-risk flood areas if they have a Westpac mortgage.

It makes Westpac the latest institution to make things harder for home owners trying to get basic protection for their properties in Queensland and New South Wales after recent extreme rains and flooding.

The internal memo was sent around the entire banking group on Friday and its order became effective on Saturday.

"For immediate action … customers in high-risk flood areas will need to have a Westpac Group mortgage over the property to apply for cover," the memo said.

"Please note this only applies to 2.5 per cent of properties across Australia."

The memo was written so Westpac salespeople know quickly what to say when responding to inquiries from customers who are worried about their homes in the wake of recent devastating floods.

It comes less than four weeks after the chief executive of Westpac's Australian Financial Services division, Brian Hartzer, made a widely publicised tour of flood-ravaged Queensland.

Mr Hartzer used the opportunity to pledge $100,000 to the Queensland Premier's disaster relief appeal, saying at the time that Westpac was committed to helping Queenslanders recover from the most-recent floods.

"Coming so soon after the floods of 2011, this is a major blow for Queensland," he said. "But we know how resilient the state and its people are and Westpac is committed to help."

The decision will be a blow to residents in flood-affected regions of Queensland and northern NSW who are facing a wave of dramatic premium increases from a dwindling pool of insurance companies still prepared to offer insurance.

A Westpac spokeswoman confirmed the change in policy, but would not say why the decision was made.

"Because we now price [our insurance] based on households rather than postcodes, customers in higher extreme risk areas will require a Westpac mortgage to get home and contents insurance," the spokeswoman said.

"But there still remains an option to review based on individual circumstances … and the order will only apply to new customers and will not be applied retrospectively."

The decision comes after one of Australia's biggest insurers, Suncorp Insurance, last year stopped offering home and contents insurance to the Queensland towns of Emerald and Roma after paying out millions of dollars from the 2011 floods. Two weeks ago, the insurer said it had already paid between $200 million and $220 million in claims this year.